Free Market Money

Free market money is about market alternatives to government fiat fraud.

05 June 2007

The Monetary Revolution Arrives

You can follow some of the story about e-gold's situation by reading my blog.

I would particularly direct you to this link: http://vertoro.com/blog.htm with attention to the 21st of May and the 4th of June. There are links there to a .pdf from e-gold and an .html file we converted from a .doc file that Doug sent me. Anyone who is available to be in DC for the evidentiary hearing in late June should try to attend. The e-gold defendants want a courtroom full of sympathetic people.

Personally, I find the video and audio quality poor, but there is video here:http://www.youtube.com/watch?v=bU9s97cUAAw which gives some flavor to the side of the story of the e-gold defendants. Among other things, it points out that government agents have noted the lack of clear law governing e-gold's activities.

Let me point out that the motion from e-gold's legal team captured in my blog entry of 4 June 2007 includes a motion to vacate the seizure order. If the judge were to grant that request, it would be a boon to 1MDC account holders and e-gold account holders. If you feel you have any particular skill in writing, you should consider writing to the judge "a friend of the court" briefing. I am composing one to send along myself.

There has been a lot of nonsense bandied about by the government on this matter. One of the accusations that has come up is that e-gold is being used by child pornographers to sell their evil materials. Absolutely false. I have detailed information on the process that e-gold principals use to identify not only child porn sellers but child porn users, close their accounts, seize their funds, and turn that information over to national groups fighting child porn.

As well, research by e-gold suggests that a very small number of vendors of child porn exist, and that they get the vast majority of their funds from credit cards (and cannot get any funds from e-gold, due to preventive measures). It appears, to me, based on what I've learned, that the government agencies charged with fighting child porn are aware of the small number of vendors and choose not to do anything to them. Perhaps it is too useful to have something to hang around the neck of anyone they want to harass? Perhaps it is too important to have a problem to justify a bigger budget? Perhaps it is time to take fighting child porn away from the putrescent corruption of government?

The e-gold principals have been using the same techniques to prevent their system from being used for credit card fraud, for Ponzi schemes, or for other types of crime. To my knowledge, they have been using forensic accounting to prevent crime on the e-gold system for years. For over a decade, e-gold has existed as a legitimate system for value transfer using actual gold as the underlying unit of value. For just under a decade, I've had an account, and I've helped e-gold remove spammers and criminals from their system. In fact, e-gold has been better regulated without government interference than any other currency system - far better than the Federal Reserve, far better than credit cards.

E-gold was designed to offer two important features: freedom from exchange risk and finality of settlement. It happens to have many other features that I like.

But, in re-working the system in 1999 and 2000, Doug failed to move the servers offshore. I think that was a major blunder. The e-Bullion system moved their servers to Switzerland in 2004, in part because I strongly recommended it to Jim and Pam Fayed, the principals of that company.

The Pecunix servers are offshore. The 1MDC servers are offshore. Many exchangers use offshore servers.

The seizure of $11M in e-gold was very unusual in several respects. First, about 25 accounts were forcibly closed. These include accounts of major exchangers and major single gold holders. There was no evidence presented against any of these accounts or account holders. Second, in addition to seizing the assets, the government demanded the forced liquidation of the gold. That is an unprecedented step, especially in the absence of any sort of evidentiary hearing. As e-gold notes in the motion that I posted on my 4 June blog, it violates the Fifth Amendment liberties of the individuals involved to have their property seized without due process of law.

But, I really don't expect much from the current government of the USA. You live in a tyranny. Your government seeks to spread tyranny over the entire globe, by force, using volunteer soldiers. "Hier ist kine warum." Here there is no why. No one asks why. "Ours is not to wonder why, ours is just to do and die."

Many years ago, in the 16th Century, Etienne de la Boetie wrote about this problem. Let me bring it up to date, in case you don't want to read the Gutenberg Project's translation of "Voluntary Servitude."

Here is the situation. You live in a tyranny because you support tyranny. You volunteer for the military. You tell your children to volunteer for the military. You pay your taxes. You turn in your neighbors when you see them doing something wrong. You provide all the support that the tyrants need to keep their power.

I don't ask that you throw down the tyrant. That wouldn't be something you'd choose to do, anyway. All I ask is that you declare yourselves free men and women and stop supporting the tyrant. If you take away his support, he'll fall over by himself. He doesn't have enough muscle to stand up on his own. Your fists are needed to enforce his laws. Your money is needed to feed his bureau-rats. Your compliance with his laws, your polite obedience, your submissiveness is all that is required to keep him on his throne, standing on your backs.

The e-gold experiment, in my opinion, has been a worthy one. The defense of e-gold's principals in court is a worthwhile exercise to see all the shenanigans of the government in a clear light.

But, there are no political solutions to our problems. Certainly, a court system as corrupt and evil as that found in the USA cannot be expected to provide a just resolution in this case, nor in any other, except rarely and by happenstance. You shouldn't bet on it. Nor do I expect war, rebellion, concentration of freedom enthusiasts, nor their dispersion to be of any help. I'd like to suppose that FSW may make a difference, but I suspect it won't, much.

What would make a difference? What can we do to bring about a better world for ourselves and our children?

Well, I think there are some things we can do. The e-gold idea addresses a core issue: economics. But, even if it were implemented with offshore servers, it is poorly designed. The account system tracks every transaction so that it is possible to trace the source, intermediaries, and destination of all funds. Then it is a question of: do you trust the e-gold principals to close accounts and seize gold only of child pornographers and credit card thieves?

I know those men and women, and I do trust them, to a certain extent. But, it remains a "trust me" level of security. And if there were something else, like speaking out against the war in Iraq, that the e-gold principals found to be a compelling threat to their liberty, or a compelling threat to "national security," would they also target accounts of dissidents? I don't know. I know that I am uncomfortable having "trust me" as the level of security for all my economic transactions.

There are, however, better technologies. Two of them that have been developed quite a ways are eCache and Loom. We are doing our best to provide tutorials and other information about them. Ultimately, I believe systems like these, and like the other eight similar concepts about which I've been briefed but which are not yet operational, are going to change the world, forever. With them, people shall be able to engage in economic transactions which are verifiable to each other, audit-able by third parties they choose, and otherwise completely invisible.

"Let me tell you what you want: you want to come and go like the wind, right?"

"Right."

"Invincible, invulnerable, invisible."

"And I want it Thursday at 9."

"It won't be invisible 'til 5." -- from the 1986 film "Running Scared" with Billy Crystal and Gregory Hines

What would that be like? What if technologies currently in development were to make it possible for you to engage in trade and commerce with your friends and neighbors without anyone else knowing about it? What if you could verify that you were not only trading value denominated in gold and silver, but you could establish that you were able, at any time, to redeem the actual physical gold and silver coins into your possession? What if a system of "Fair Witnesses" and audit protocols and discount houses and digital real bills were to be developed by various entrepreneurs in a fashion that would provide reliable transactions, redeemable units of underlying value, freedom from exchange risk, and finality of settlement?

There are many implications for such a system, but I'll tell you the one that I like best. When these things are available, it becomes possible to prevent, for all time, anyone from having the power to massacre 250 million people in a single century. It becomes impossible to fund aggressive foreign wars as the Japanese militarists under Tojo, the Nazis under Hitler, or the Soviets under Stalin did. It becomes impossible to establish coercive fiefdoms like those of Mao, Pol Pot, and Saddam Hussein. It becomes impossible to fund with foreign debt and inflationary currency endless cycles of genocide and militarism.

Would it end all war? Certainly not. Would it make the world a utopia? Nope. But, it would be a better step on the path to the stars. It would lay a cornerstone of the economy on a solid foundation of rock hard principle. And on a foundation of rock, I believe I can build a stairway to the stars.

The thing that is most delightful to me about this project is: you cannot do anything to stop it. It is entirely out of my hands, and it is entirely out of your hands. It is the obvious consequence of certain developments in cryptography that took place back in the 1970s. It is the obvious consequence of certain developments in communications that took place in the 1970s and 1980s. There are dozens of entrepreneurs working on this stuff, right now. Kill them all and hundreds more would arise, spontaneously, to take their places and implement their business plans, or plans essentially the same.

It won't make up for their deaths. It won't vindicate them for having gone willingly into the death camps and the gas chambers. But, by preventing the 21st Century from being a mirror of the horrors of the 20th Century, I believe these technologies are important. I believe they make a difference in what sort of world we live in. I believe in this monetary revolution, and I choose to be a part of it.